Workers, Unions, and Takeovers

How do takeovers affect workers?? wages and job security in the short-run? What role does the labor union play in mitigating these effects? I answer these two questions by analyzing wage and employment outcomes of over 4,000 public firms that were acquired between 1981 and 2002, using establishment-level data from the U.S. Census Bureau. I find that target establishments exhibit a net contraction in wages and employment, relative to comparable establishments after takeovers. Targets?? establishments in more unionized industries experience worse wage and employment outcomes after takeovers. These adverse effects are exacerbated when the establishment is located in a state with Right-to-work laws where unions face a less favorable bargaining environment. These findings indicate that target firms?? employees are negatively affected by takeovers and that their labor unions do not mitigate these negative effects.     

The union wage effect in Canadian manufacturing industries

Data for Canadian manufacturing industries, at the two-digit level, are used to examine the component elements of the union wage effect. The results show that absence of compulsory union membership for all employees in the bargaining unit served by a union does not significantly impair the ability of the union to negotiate wage gains. That is, our results imply that there is little reason for unions to devote much effort to negotiating the stronger forms of union security — union or closed shops. A second implication of our results is that significant bargaining advantages may accrue to unions with an international (U.S.) link, relative to Canadian national unions.     

Technology,international competitiveness,and union behavior

Union opposition to a free trade agreement with Mexico affirms the conventional wisdom that international trade damages the union movement. This study uses data from the March and May CPS for 1984 to 1987 to investigate this issue for production workers. The results indicate that union wages are not influenced by greater trade at medium union densities. However, at low union densities, greater imports (exports) reduce (increase) wages with the opposite pattern occurring at high union densities. The union wage pattern is consistent with product market considerations playing a strong role at low union densities and end game considerations playing a strong role at high union densities. In general, nonunion wages are not significantly impacted by greater trade. After controlling for imports and exports, nonunion wages are much greater in internationally competitive industries while union wages are not significantly greater in competitive industries. Nonunion wages appear to be more influenced by efficiency wage considerations. Thus, a Mexican free trade agreement will have little influence on union wages and should increase nonunion wages. I thank Wally Hendricks, Larry Kahn, Dan Rickman, and Doug Dalenberg for their very useful comments. All remaining errors are my own.     

Chipping Away at the Fortress: Unions, Immigration and the Transnational Labour Market

Conventional wisdom holds that in liberal industrialized countries, times of economic recession and high unemployment create pressures for restrictive immigration legislation, proposals which will be supported by trade unions as a means of safeguarding their interests. Drawing on a case study of British trade union opposition to the 1996 Asylum and Immigration Act, this article argues that trade unions, which traditional interpretation suggests support such protectionist measures, are actually at the forefront of opposition to them. We suggest that the increased transnationalization of labour markets, combined with the particular nature of the legislative response, had led unions to adopt this apparently paradoxical position.     

Comparative advantage and the welfare effects of uniform wage policies

This paper analyzes the theoretical impact of a commonly cited union goal — the elimination or reduction of wage differentials within occupations. By dropping the usual assumption of homogeneous labor, we show how, and under what market conditions, workers will receive rents due to individual comparative advantage. In competitive labor markets a union-imposed uniform wage may lower the earnings of workers holding a productive advantage, causing a reduction in employment and a welfare loss of comparative advantage rents. The implications of a strict uniform wage rule imply that unions may be forced to adapt their wage policy to allow more productive workers to receive wage differentials. This consideration helps explain some common trade union institutions.     

GENERAL WAGE ESCALATOR CLAUSES AND THE INFLATION UNEMPLOYMENT TRADE OFF

The purpose of this paper is to determine empirically the effect of general wage escalation, which is practiced in Israel, on the inflation unemployment trade off. Wage escalation is introduced by including a cost of living allowance variable in the wage equation which turns out to be very significant. It makes the long run Phillips Trade off relation much more inflationary, but does not obliterate it. A comparison with a wage price block for the U.S. suggests that the long run trade off is more inflationary in Israel and that wage indexation is one of the reasons for this bias.     

Unions as value-adding networks: Possibilities for the future of U.S. unionism

VII. Conclusions The decline in private sector union density in the U.S. coincided with increased innovation at the local level. One trend in particular, value-adding unionism, may offer some hope for those who believe that workers, the economy, and the nation benefit from strong, independent trade union movement. Unions that can add value to firm performance while at the same time fulfilling their responsibilities to represent the collective and individual interests of their membership have greater appeal to potential union members seeking opportunities for both representation and participation. Since they add economic value to firms, they may also reduce the level of managerial resistance that we have seen in recent history. Farber and Western (2001) argue that the overall U.S. decline in union density is almost entirely due to falling employment in unionized firms and increases in nonunion firms. This value-adding approach offers one strategy to preserve and expand union employment in firms where it is already established, thus slowing or reversing the decline. Moreover, as structural changes in the economy have led to shifts away from sectors with high levels of union density, they have at the same time put a premium on the ability of firms to respond quickly to changes in the marketplace and the competitive environment. Value-adding unions can provide the infrastructure for organizational networks that facilitate the communication and coordination necessary to adjust to such changes. Thus, new forms of representation that provide unions and their members with greater opportunities in decision making, management, and governance can add value to both management and labor. I thank Charles Heckscher and Bruce Kaufman for comments on earlier drafts of the paper and the National Science Foundation, Rutgers University, and MIT for financial support.     

Union Organizing and Membership Growth: Why Don’t They Organize?

This study analyzes U.S. union organizing activity and membership growth from 1990 to 2004, a period in which an overall pattern of union decline continued and in which organizing achieved renewed prominence as both a union policy and public policy issue. Models for organizing activity and membership growth were proposed and tested. Union decentralization and employer opposition were found to be key predictors of organizing activity differences among unions. These same factors, along with organizing activity, helped explain union differences in membership growth, as did a ??Sweeney era?? effect.     

Trade unions and quits: Australian evidence

This study uses data from the recent Australian Workplace Industrial Relations Survey to test the union voice hypothesis that unions reduce quits. Unlike the U.S., however, it is argued that union voice may not be directly correlated with union membership as a result of the protections afforded trade unions by the unique Australian industrial relations system. It is found that, while unions are inversely associated with quit rates, this effect is strongest where union membership is supplemented with a more direct indicator of what unions actually do in the workplace. The authors thank the Australian Commonwealth Department of Industrial Relations for the data used herein, Robert Drago, Bruce Chapman, and an anonymous referee for helpful comments and advice, and attendees at the Australian Labour Market Research Workshop, February 1993, Perth, at which an earlier version of this paper was presented.     

Intensity of management resistance: understanding the decline of unionization in the private sector

IX. Conclusions Although Lipset and Katchanovski present many of the major societal and structural causes that have influenced the decline of private sector unions, they have unfortunately omitted a factor that can account for as much as 40 percent of the decline in private sector union membership, i.e., intensity of management opposition. The managerial incentives to stop unionization are formidable because unions raise wages and reduce profits. Economic reasons for American managers to stop unionization have grown as the wage between union and nonunion workers has widened over the past 40 years especially relative to EU nations. In addition, as managerial accountability to shareholders has risen and pay related to performance has grown, top executives have attempted to raise productivity through high-performance workplace practices or lowering real wages. Since many of these practices rely on top-level executives being able to make decisions on personnel quickly without challenges from employees or due process, they have fought unions more vigorously in order to maintain this discretion over workplace decisions. Although this behavior by management may result in a more efficient allocation of resources from both a micro-and macroeconomic perspective, the losses to society occur in terms of greater income inequality and less employee voice at the workplace and in the political arena.     

Wage and nonwage outcomes in collective bargaining: Determinants and tradeoffs

Using unskilled labor wage rates and union contract scores derived from a sample of 500 U.S. manufacturing contracts, this study finds that in 1975 there was considerable variation in unions’ abilities to deliver higher wages and desirable nonwage contractual provisions to their members (though it is clear that the stronger unions have bargained high levels of both wages and nonwage items). There are a variety of union power, employee quality, union preference, and employer cost variables which impact upon the bargaining choices made between wages and nonwage provisions, and it appears that union strength tilts the compensation package toward wages. The authors, associate professors at the University of Illinois, are very grateful to Christopher Pawlowicz, Ronald Seeber, and Roger Wolters for their help in gathering data. They also are grateful to the Office of the Assistant Secretary for Policy, Evaluation and Research of the U.S. Department of Labor and to the Research Board of the University of Illinois for financially supporting this research. Such support in no way implies, however, that the Department or the University endorses the methods or conclusions in this study.     

Whatever happened to the monopoly theory of labor unions?

This paper argues that unions act in accord with the conventional cartel or monopoly model. The basic premise is that it is useful to ask what a “union maximizes” because if more wealth is available, union decision-makers have an incentive to capture it for themselves or their membership. In the formal model, unions negotiate wage rates which maximize the monetary surplus above the supply price of labor, providing an endogenous answer to the questions of how union employment and wages are simultaneously determined. Comparative static analysis yields empirical predictions about the behavior of union employment, wage rates, and union-nonunion wage differentials. I would like to acknowledge helpful comments by Richard Anderson, Ray Battalio, Hugh Macaulay, Michael Ormiston and Akira Takayama on earlier drafts of this paper. The usual caveat applies.     

Transnationale Lohnkoordination zur Stabilisierung des Euro? Gab es nicht,gibt es nicht,wird es nicht geben

Nominal de- and revaluations are impossible in currency unions. In order to prevent current account imbalances, the euro therefore requires the transnational synchronization of labor cost increases. Since the 1990s and especially since the introduction of the euro, European trade unions have announced their goal of coordinating their wage demands transnationally. Such announcements continue even though wage coordination continually fails. Pragmatist action theory makes us aware that actors solve the discrepancy between the desirable and the doable by de-coupling talk and action and that current attempts mainly aim at keeping the possibility of effective wage coordination a goal for the distant future. In the short and middle run, in contrast, nothing indicates that the distorted real exchange rates from which the eurozone suffers could be corrected by the means of wage coordination. The euro therefore lacks the crucial precondition for low-friction functioning.     

The political influence of unions and corporations on COPE votes in the U.S. senate, 1979–1988

The political influence of unions and corporations is examined by analyzing Senate roll-call votes on COPE-identified legislation for the period 1979–1988. Union PAC contributions and union membership both have significant positive effects on three different types of COPE legislation: Narrow Union, General Labor, and Non-Labor. In addition, corporate PAC contributions to senators’ opponents reduce their pro-union voting behavior on Narrow Union and General Labor bills. There is no evidence that the political influence of unions in the U.S. is declining.     

Some Notes on Workplace Equality Renewal in the Swedish Labour Market

In 2001, Swedish authorities imposed a new obligation upon all firms with ten or more employees to undertake annual wage surveys, ‘workplace equality audits’ in which it is possible to ascertain, remedy and prevent unwarranted wage differentials and other unfair employment terms between men and women. An important implication of the new system, called ‘workplace equality renewal’ (självsanering), is that, at the level of the firm all Swedish employers must explain what they mean by work of ‘equal value’ as opposed to ‘different value’. This article discusses the practical pros and cons of the new system, and considers how the surveys can be used in research into the present state of gendered work division. A main finding is that the introduction of this new legislation in the long run might change the Swedish industrial relations system as well as the preconditions for many companies’ human resource management policies. Yet, neither the governmental agencies involved nor the parties’ confederate organizations have been able to clarify what the issue is really about to the single, small business employer or to the local trade union branches. Many employers find any interference, whatever it may be, threatening and trade unions have not realized the potentialities of the system from an employee perspective, potentialities connected to the fact that companies are now more or less forced to make transparent their wage policies at large.     

RACE AND RELIGION IN THE BIBLE BELT: PARENTAL ATTITUDES TOWARD INTERFAITH RELATIONSHIPS

This study examines the racial and religious differences in parental attitudes toward interfaith relationships in the Bible Belt region of the United States. Using data from the 2007 Georgia Southwestern Omnibus Community Survey, we explore attitudes toward interfaith unions and whether opposition becomes stronger as the union becomes more intimate. We utilize marriage market theory and third party influence to explain subjective parental attitudes toward the interfaith unions of their children. We employ a tolerance scale and logistic regression to predict the racial, religious, and cultural differences in opposition toward interfaith friendship, dating, and marriage. Results indicate that religious importance is a more significant predictor of interfaith opposition than religious affiliation. In addition, white parents exhibit greater opposition toward interfaith dating and marriage than black parents. Overall, the level of opposition toward interfaith unions increases as the relationship becomes more intimate.     

MINIMUM WAGE EFFECTS WITH OUTPUT STABILIZATION

What are the effects of legal minimum wage rates on the U.S. economy? Does minimum wage legislation promote the economic self-interest of high wage union labor and impede the economic self-interest of capitalists as our earlier research [Cox and Oaxaca 1982] suggested? This paper uses a nine sector econometric/simulation model of U.S. industry from 1975–1978 to answer these questions in the context of stabilization policies which hold aggregate real output constant. While most simulated percentage effects are small, those for the unskilled workers themselves are not. A 15.7 percent increase in the average nominal wage rate of unskilled labor, as a result of minimum wage legislation, produced an 11 percent decrease in unskilled employment, 2.2 million jobs lost, while increasing the real wage of unskilled workers by 15 percent. Simulated changes in several key variables support our earlier observations that the self-interests of labor unions, with skilled workers, conflict with those of capitalists over the issue of minimum wage legislation.     

The economics of the decision to join a union

This article attempts to bring about a synthesis of the theory of human capital and the disparate and largely empirical literature on the impact of unions on an individual worker’s terms and conditions of employment. This is done by modeling the decision of a worker to join a unionized firm or vote for a union in an NLRB election. From this model both the theoretically correct valuation and some empirical estimates of the value of the major wage and nonwage (seniority, discipline and discharge, strikes, dues) impacts of unions are presented. Extensions to risk averse workers, free rider problems, union elections and contract ratification votes are also briefly considered.     

Has management strangled U.S. unions?

Conclusions The view that decline unionization is a disinctive U.S. development different from the experience of our structurally similar neighbour, Canada, and different from the experience of the most advancement industrial countries in Europe and the alleged distinctiveness of U.S. experience supported the search for a cause in U.S. institutions 20 years ago, what now appears as a broad social trend almost as ubiquitous as unions themselves argues for explanations that cross international borders. Structural change is an appealing candidate, for the comparatively high income elasticity of demand for products and services produced in sectors where unions are sparse render declining union density from heavily unionized to lightly unionized sectors are only a minor source of the fall in aggregate unionization rates in most countries. This project benefited from financial support from the Standford Graduate School of Business, research assistance from Vidya Reddy and Alexei Tehistyi, and comments from William Gould, Bruce Kaufman, Melvin Reder, Leo Troy, and Jelle Visser.